Colorado faces $3.3 billion state deficit due to coronavirus pandemic
DENVER — Colorado’s tourism-and-energy-dependent economy has been crushed by the coronavirus pandemic, presenting lawmakers with a projected $3.3 billion in cuts they must make to craft a balanced state budget for the fiscal year that begins July 1, legislative economists said Tuesday.
The $3.3 billion figure represents a tenth of the state’s total budget and nearly a quarter of its general fund, which is devoted to crucial government services. Colorado’s economy could contract by 6% this year, Kate Watkins, chief economist of the Legislative Council staff, told the Joint Budget Committee.
The bipartisan committee is charged with writing a balanced budget each fiscal year. It has been examining spending cuts while the 2020 legislative session has been suspended since March because of the coronavirus. Lawmakers are tentatively scheduled to return on May 26.
Both Watkins and Lauren Larson, executive director of Democratic Gov. Jared Polis’ Office of State Planning and Budgeting, emphasized that budget writers are dealing with unprecedented uncertainty over the pandemic’s future course, the pace of businesses reopening, the possibility of a double-dip recession and consumer confidence.
Watkins’ forecast also assumes there will be a treatment for the virus in 18 months — a far from guaranteed prospect, she acknowledged. Economic recovery is a matter of years, not months, she and Larson said.
Committee members also were told the state’s Unemployment Insurance Trust Fund, which had $1.1 billion on Jan. 1, could be insolvent by July 1 — forcing the state, as it did during the Great Recession, to obtain an interest-free loan from the federal government to keep it operating.
Unemployment insurance claims reached a weekly average of 56,800 in April, compared to a weekly average of 1,900 for all of 2019.
In March, Polis enacted a statewide stay-at-home order that, in part, closed thousands of nonessential businesses to slow the spread of the coronavirus. He’s since begun a gradual relaxation of its restrictions.
In April, Polis announced nearly $289 million in cuts to the current fiscal year budget to offset declining revenue. The cuts affected numerous agencies and projects but didn’t include layoffs or furloughs of state employees.
Before the pandemic, Polis had proposed a $34.5 billion state budget for the next fiscal year, emphasizing early and higher education investment. Larson said Tuesday at least $3.4 billion needs to be cut from that request.
Colorado’s coronavirus death toll surpassed 1,000, state health authorities said Tuesday. More than 20,000 people have tested positive.
For most people, the coronavirus causes mild or moderate symptoms, such as fever and cough that clear up in two to three weeks. For some, especially older adults and people with existing health problems, it can cause more severe illness and death.